“Thought provoking and fresh – this book challenges how we think about economics.”Gillian Tett, Financial Times

IN NOVEMBER 2008, as the global financial crash was gathering pace, the 82-year-old British monarch Queen Elizabeth visited the London School of Economics. She was there to open a new building, but she was more interested in the assembled academics. She asked them an innocent but pointed question. Given its extraordinary scale, how was it possible that no one saw the crash coming?1 Hereditary sovereigns are not normally given to puncturing the pretensions of those in charge of the global economy, or of the economists paid to understand it. But the Queen’s question went to the heart of two huge failures. Western capitalism came close to collapsing in 2007–2008, and has still not recovered. And the vast majority of economists had not understood what was happening.2 This book is about both failures. On the one hand the capitalist economies of the developed world, which for two hundred years transformed human society through an unparalleled dynamism, have over the past decade looked profoundly dysfunctional. Not only did the financial crash lead to the deepest and longest recession in modern history; nearly a decade later, few advanced economies have returned to anything like a normal or stable condition, and growth prospects remain deeply uncertain. Even during the pre-crash period when economic growth was strong, living standards for the majority of households in developed countries barely rose. Inequality between the richest groups and the rest of society has now grown to levels not seen since the nineteenth century. Meanwhile continued environmental pressures, especially those of climate change, have raised profound risks for global prosperity.